Firms vie for contract to replace city's water meter system

James M. Riordan

Algerina Perna / Baltimore Sun

James M. Riordan, a real estate investor in Roland Park, recently received an erroneous water bill for over $7,000. He says he was charged for a bill that originated from this pipe- where the meter was recently removed. His property line ends to the left of the telephone polls in the background.

James M. Riordan, a real estate investor in Roland Park, recently received an erroneous water bill for over $7,000. He says he was charged for a bill that originated from this pipe- where the meter was recently removed. His property line ends to the left of the telephone polls in the background. (Algerina Perna / Baltimore Sun)

Luke Broadwater, The Baltimore Sun

Two politically connected firms are lobbying for a multimillion-dollar contract to overhaul the city's water-meter system — a once-in-a-generation effort Baltimore officials say could help end the chronic problem of wildly erroneous bills.

City purchasing officials, who are evaluating the bids, could recommend one of the companies to Mayor Stephanie Rawlings-Blake as early as Friday.

The winning bidder will have to install more than 400,000 water meters and replace the management system by April 2017 — likely not soon enough for customers who continue to receive exorbitant, and inaccurate, bills.

James M. Riordan recently received a nearly $7,000 water bill at his Roland Park home for a line that once served a nearby development but not his property. "There are only three of us in this house," he said Thursday. He said it took four months of complaining to get the city to issue a correct bill — for about $200.

Rawlings-Blake says inaccurate bills are inevitable until the old meter system is replaced. "Until we get upgraded and state-of-the-art water meters across the city, we're going to continue to see that," she said.

A seperate contract will be bid on to replace the billing system as well.

The city has disqualified three companies who were vying to install a meter system, leaving two finalists. Both companies are pitching wireless "smart" meters that would transmit signals that continuously monitor a customer's water use and cost. The signals would go to the city's billing headquarters, where the data would be posted online. That would allow residents and city officials to check water use and cost at any time.

Among other benefits, smart meters could help the city and customers quickly detect leaks.

But the companies' bids differ in significant ways. They are $101 million apart in price, offer varying signal quality and propose to provide significantly different services in Baltimore County.

Itron Inc., based in Washington state, is represented by lobbyist Lisa Harris Jones — whom the mayor has described as a "lifelong friend." It has bid $83.5 million for the job. Itron, which operates wireless water meters in other large cities, proposes completing nearly every aspect of the job at a lower cost than its competitor, according to bid documents. For instance, Itron proposes charging about $35 million less to purchase and install copper pipes and related items.

Dynis LLC, based in Columbia, is represented by lobbyist Ryan Potter — whose law firm, Gallagher Evelius & Jones, donated about $35,000 to Rawlings-Blake during her mayoral campaign. Its bid, at $184.7 million, is more than twice Itron's. Dynis boasts exclusive access to wireless wavelengths that avoid signal interference and proposes covering all of Baltimore County with its smart meters. Itron's bid proposes covering 26 percent of Baltimore County, while upgrading the rest of the county to a system that would continue to require city Department of Public Works employees to drive to customers to read meters quarterly.

Rawlings-Blake has said she is not participating in the Purchasing Department's evaluation and cannot, under city rules. But the city's five-member Board of Estimates, which the mayor controls, will eventually vote on the deal.

Baltimore provides water meter service to about 410,000 customers, half of whom reside in Baltimore County. Baltimore officials voted in July to raise water and sewer rates by 42 percent over three years to help pay for infrastructure and other improvements. City water service is paid for through a self-contained utility that is controlled by the mayor and does not go through the budget process.

Karen Whichard, the community relations manager at the Charlotte-Mecklenburg, N.C., water utility, said cities across the country are looking to upgrade to smart meters to cut down on water billing problems.

"We want to get them," she said, predicting it would likely take the city a decade to complete the project. "We don't know what people use by the hour, by the day. Customers can access the data and they can determine if there's a leak."

She noted there's a "big price tag" with such an overhaul but that nearly "every utility in the country" was looking at the new meters as a option.

In Baltimore, residents have long complained about erratic water bills. But the issue gained widespread attention last year when the city's auditor found the Department of Public Works overcharged thousands of customers by at least $9 million. An investigation by The Baltimore Sun also uncovered numerous problems, including a $100,000 overbilling of Cockeysville Middle School and the case of a Randallstown woman who'd been receiving her neighbor's bills for seven years.

The errors led to a tripling of sewage bills for customers of the city system who live in Baltimore County. The city also acknowledged that some workers had fictionalized bills. The administration pledged a series of reforms, including increasing the number of meter readers, inspectors and customer service representatives. Estimated and skipped readings have dropped as a result, officials say.

Despite those efforts, the problems persist.

Riordan, the Roland Park customer, said he believed a wireless water meter system could "produce a very good result" for residents. A real estate investor, he said such a system is in place the Harborview condominiums at the Inner Harbor, allowing people to "quickly detect leaks."

Elliot Zulver, president of Walbrook Mill and Lumber Co. Inc., recently received $9,000 and $64,000 bills at his properties that he believes are erroneous. He isn't so sure a new contract will fix the city's billing problems.

"The system will only be as good as the guys who are setting it up," he said.

Itron officials declined to discuss their proposal, citing procurement rules. Officials at Dynis agreed to talk generally about their company and the product the team is offering.

Dynis CEO Earl Scott said he's long been preparing for the opportunity to overhaul the city's water meters. Members of his team include financier J.P. Grant, CEO of Grant Capital Management, a big campaign donor to the mayor who ran the Grand Prix of Baltimore; consultant Peter Auchincloss, the president of Watermark Corp., who was once a city planning commissioner; and members of Kearney-O'Doherty Public Affairs, the politically connected communications firm.

"We have assembled what I believe is the best in the industry to work on this project," Scott said. "We didn't just stumble into this. We didn't just fall into this. We've been working on this for three years."

Most significantly, Dynis has partnered with Sensus, the North Carolina-based smart meter company that frequently competes with Itron on contracts throughout the country. But Dynis, which builds communication networks, has never worked on a water meter system before.

Itron is considered a global leader in wireless water meters. Last month, the company announced it has been ranked No. 1 across multiple categories in a global water meter market analysis report. Last summer, the company said it was providing thousands of their meters to India.

Providing smart meters to just a quarter of county customers is one reason the Itron proposal would save money. The company proposes to charge less for everything from supplying transmitters to providing software maintenance.

City officials could finance the work with water bonds, but also asked each team for an alternative financing proposal.

Grant, who has provided more than $250 million in financing in Baltimore, is proposing a 3.85 percent interest rate over 10 years. Itron is offering alternative financing through Government Capital Corp., which would charge a 2.85 percent interest rate over 10 years.